SIR Keir Starmer and Rachel Reeves are gripped by a “panicked bunker mentality” and could be ousted within months, government insiders warned.
Confidence in the PM and his Chancellor has been left shattered after a nightmare week of briefing wars and humiliating Budget U-turns.
Despairing Labour MPs, ministers and aides privately admit the Starmer project — which won a landslide just 18 months ago — is now dead and buried.
One frontbencher predicted Sir Keir will “drop Rachel like a stone” after the Budget to save his own skin — but will end up being ousted after local elections next May.
A senior government source said: “There’s a panicked bunker mentality in No10 now. Even the PM’s biggest defenders don’t have faith in him anymore.”
It comes after a week in which rumbling tensions between No10 and Labour ministers exploded into open civil war.
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On Tuesday night, No10 sources accused Health Secretary Wes Streeting of secretly plotting to oust Sir Keir and become PM within weeks.
A furious Mr Streeting denied the claims — declaring himself “faithful” and demanding the anonymous officials behind the claims were sacked.
Sir Keir rang him around 9pm on Wednesday night to offer a short apology and suggest they catch up for a cup of tea soon.
Many blamed the PM’s powerful chief of staff Morgan McSweeney for the briefing against Mr Streeting.
On Thursday, rumours that No10 was searching for “a fall guy” to take the blame ripped through the government.
But no one was fired and instead the PM issued a statement saying he accepted assurances from his team that No10 was not behind the attack.
The Starmer regime was then plunged into fresh turmoil on Thursday night when news broke that Ms Reeves had axed plans to raise income tax by 2p. This would have broken Labour’s manifesto.
The City took fright at the Budget U-turn, causing the pound to tumble and sending the cost of UK borrowing up.
Treasury sources said plans for tax rises could be eased thanks to better than expected economic forecasts by the Office for Budget Responsibility.
But insiders think Ms Reeves and Sir Keir tore up the plan because they are too politically weak to fend off the backlash.
A City source said: “This is worse than the worst days of Boris Johnson and Rishi Sunak. This is beginning to rival Liz Truss.
“No one in the City trusts or believes Rachel. Any confidence they had is shattered.”
Among Labour MPs, frustration at No10 has turned to anger and despair.
Now the sharks are circling.
A senior government source said: “The tax U-turn makes no sense, it is just chaos.
“Keir is more unpopular than Liz Truss now.”
Labour MPs are split between two camps over when to strike.
The first think Starmer should be ousted after local and regional elections in May — predicted to be a bloodbath for Labour.
A second camp wants to move sooner in the hope this will save councillors from wipeout.
This camp includes many Scottish and Welsh MPs who expect Labour to get a kicking in elections in the Scottish parliament and Welsh Assembly next year.
A Labour frontbencher said: “Keir will drop Rachel like a stone. He could try to use her as a human shield. This would give Keir a narrow window to do something miraculous and turn things around.
But the party will want Keir to take the bullet for the May elections. Why move before? So it looks like another six months of limping on.”
Another party insider said: “Keir will limp to May and then go. Rachel and Keir go together. They are joined at the hip.
“It is like Kwasi Kwarteng and Liz Truss.
“There may be a few days between them, but that’s it.”
Keir will limp to May and then go. Rachel and Keir go together. They are joined at the hip.
Earlier this week, Cabinet advisers attended ‘spad school’ where there were given a lesson by Cobra in what to do in a crisis.
One No10 aide rose their hand and asked what a crisis was. The person giving the presentation paused and said “we can’t get you out of a political crisis.”
A Labour leadership election can only be triggered if 20 per cent of Labour MPs back a candidate.
There are 405 Labour MPs currently, so 81 will need to support challenger.
Many Labour MPs want to see a “coronation”. They fear that if a leftie makes it onto the ballot they will win and drag the Government away from the centre ground.
They also fear the instability of a contest will panic the markets.
Runners and riders for who might replace Sir Keir are being talked about in the MP-packed pubs of Whitehall.
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Wes Streeting, Shabana Mahmood, Angela Rayner, Louise Haigh, Heidi Alexander and John Healey are all being mooted as contenders.
Ed Miliband ruled himself out earlier this week, but many think he is still secretly harbouring hopes of a comeback as party boss.
On Friday night, Clive Lewis become the first Labour MP to call for Sir Keir Starmer to be replaced by Andy Burnham.
The left-winger told Channel 4 News: “I think the Labour party, the Labour grandees, the men in grey suits now really, seriously think, how can we get Andy Burnham back in to this parliamentary Labour Party — and let him step up and become the next Prime Minister?”
Pat McFadden is seen as the favourite to be made Chancellor if Ms Reeves is sacked.
Sir Keir still has some defenders. A Cabinet minister said: “Keir will stay.
“Labour MPs are worried about who comes next, left-wing candidates like Angela Rayner are more popular with members.
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“And if they were elected and tried to pull Labour to the Left, the calls for a general election would be deafening.”
The Government will try to get back on the front foot this week by announcing what it says is the biggest borders crackdown in a generation.
Refugee status will be temporary and refugees will be returned to their home countries once they are deemed safe
IAN AUSTIN: MPs must stop squabbling and start governing for Britain
I DON’T want to sound like Victor Meldrew but I can’t believe what’s going on in Westminster.
MPs acting like toddlers. Ministers running round like headless chickens.
They’re in meltdown because Downing Street thinks Health Secretary Wes Streeting wants to be Prime Minister. Someone accused MPs of being ‘feral’.
The poor kids wet their pants and demanded the PM sack his chief of staff Morgan McSweeney, even though he’s the only reason they won their seats and have a Labour government.
They need to calm down and grow up.
Look what’s going on in the real world.
Our streets aren’t safe but you never see a copper on the beat.
Immigration is coming down but the number arriving by small boats is still going up. The numbers overall are so high no one can possibly know who is coming here.
The country’s in crisis but MPs are more worried about their own jobs than yours.
National debt is about to hit 100 per cent of national income. The ‘blackhole’ between what the government brings in and spends could be £20 billion.
Inflation is almost four times the level in France and hitting every family in the pocket every time they go to the shops.
Four million are being paid benefits but don’t have to look for work. I’m not being harsh, but no one thinks we’ve suddenly become so ill that millions are being signed off forever.
Housing is one of their top priorities and building homes could create some jobs, but construction has ground to a halt because there’s no confidence in the market and the planning system is a joke.
The biggest scandal of all is youth unemployment. A million people under 24 with no job, no apprenticeship and no skills. A disaster not just for them, but for all of us.
They’re facing a future with no work and the rest of us will be paying for it.
The number of apprenticeships was a scandal before Covid and has collapsed since. MPs should be getting up every morning determined to do something about it.
Unbelievably, they’re still waiving visa rules to bring people in for dozens of jobs including brickies, painters and decorators, carpenters and steel erectors. They’re still recruiting nurses overseas.
All jobs British kids could be trained up for.
I went to watch Prime Minister’s Questions on Wednesday but jobs were barely mentioned. No one spoke about immigration at all.
It was Remembrance Week so I invited a great British hero called Mervyn Kersh to watch it with me. He’s a hundred years old and took part in the D Day Landings.
He was younger than any of the MPs when he and his mates stormed the beaches of Normandy under German fire.
The MPs cracked their stupid jokes and bawled like school kids. I looked at him and wondered if he thought the country he fought for is in safe hands.
We’ve got the budget to look forward to next. Chancellor Rachel Reeves has to deal with the £20 billion blackhole but Labour MPs have put her in an impossible position.
She obviously can’t borrow more but they fight any attempt to make savings.
Earlier this year they stopped her saving even a tiny fraction of the ballooning welfare budget. Instead they’re campaigning to increase benefits. And your taxes are going up to pay for it. I can’t see that ending well.
When I joined the Labour Party we used to fight for jobs. Now MPs campaign to keep people on welfare.
Work is the best way of tackling poverty.
Work and Pensions Secretary Pat McFadden represents one of the country’s youth unemployment blackspots. He’s furious about it and is drawing up plans for jobs, skills and apprenticeships. He knows welfare has to be reformed and MPs need to get behind him.
Wes Streeting is hiring more doctors and bringing waiting lists down. And if anyone is tough enough to tackle immigration its Shabana Mahmood.
And Parliament needs to start standing up for the values Mervyn and his generation fought for: democracy, freedom and fairness. Take on the extremists, hate preachers and sectarian politicians who are dividing our communities.
MPs should be working on these issues every day – not the childish bickering we saw last week.
They’ll be signing on as well if they don’t listen to the public, get the economy moving and get Britain back to work.